January 3, 2024, /South China Morning Post/ - Douyin, the Chinese version of TikTok that is betting big on e-commerce, has made its “express refund” policy mandatory, forcing merchants to immediately return money to consumers upon request to compete with similar offerings on Taobao and Pinduoduo.
The platform operated by Beijing-based ByteDance, which added a shopping channel in 2019, allows users to get a refund as soon as they mail back the returned parcel, rather than when the merchant receives it. A recent policy update regarding the service introduced in 2021 denies merchants the option of turning it off.
E-commerce platforms are turning to policies known as “refund without returning the cargo” or “refund without reason” as part of a push to be more consumer-friendly at the expense of merchants amid intensified competition. Online retail sales of tangible goods in China increased 8.3 per cent in the first 11 months of 2023, according to the National Bureau of Statistics.
Budget shopping app Pinduoduo, owned by PDD Holdings, was the first major e-commerce site to introduce a similar refunds policy in 2021 allowing users to get their money back without returning goods found to not match merchant descriptions. This was seen as a major factor in helping Pinduoduo woo price-sensitive Chinese consumers away from competing platforms.
The policy of allowing refunds without returns has started to gain favour as platforms look for any possible edge over rivals.
Taobao, the e-commerce platform from Alibaba Group Holding, and JD.com last week rolled out their own “refund only” policies, finally matching the option from Pinduoduo. Alibaba owns the South China Morning Post.
Douyin has offered refunds without returns since September.
Douyin’s new refund service is not available for customised products or non-tangible goods such as memberships. Instant refunds are also limited to 1,500 yuan (US$211).
Alibaba has been facing a new sense of urgency to win back consumers after PDD overtook China’s e-commerce king in market capitalisation. Alibaba was valued at US$190.2 billion on the New York Stock Exchange on Tuesday, lower than PDD’s US$193.5 billion on the Nasdaq.
In December, Alibaba promoted six young managers to run its core e-commerce business unit in an attempt to “reignite their entrepreneurial spirit” and “secure and win their future”, according to an internal letter penned by the conglomerate’s CEO Eddie Wu Yongming, two days after he became the head of the unit.
